SETH PRATAPSINGH MOHOLALBHAI Vs. KESHAVLAL HARILAL SETAHVAD

JUDGEMENT

(1.) This is an appeal from a judgment of the High Court at Bombay reversing the judgment of the Subordinate Judge at Ahmedabad who had given judgment for the plaintiffs. The suit was brought on a surety bond given by the defendants guaranteeing a loan on mortgage, which the plaintiffs had lent to one Desai Krishnalal Narsinhlal whose wife was a sister of the respondents. The defence was that the sureties had been released by the subsequent dealings between the creditors and the principal debtor. It appears that before the mortgage in question was executed the principal debtor, a pleader in Ahmedabad, had given mortgages over four different parts of his immovable property to various creditors to secure loans which were then outstanding. The transaction with the creditors, who appear to be administrators of a charitable fund, was in the nature of a consolidation mortgage whereby Krishnalal was to borrow Rs. 1,25,000, which was to be applied in redeeming the four properties, the lenders to have a mortgage over the four properties. The mortgage deed, which is in Gujerati, is dated 17 October 1921. It is headed Deed of mortgage with possession for Rs. 1,25,000 in respect of the property situate in forth Dascroi. After stating the parties it proceeds : I (the mortgagor) give this in writing as follows: "To wit :-I have taken (borrowed) Rupees 1,25,000, in words one lac and twenty-five thousand, in full, in cash, of the Bombay currency, on personal security. Interest on the same is to accrue due at the rate of nine per cent per annum; in all Rs. 11,250, in words eleven thousand two hundred and fifty rupees, are to accrue due thereon) for interest every year. I am to pay every year the said interest including (interest for) an intercalary month. In security for the moneys of this deed and the interest thereon (I mortgage the following property : -) Houses and bungalow and land belonging to me by right of exclusive ownership and being in my possession, which are situate within the sim (limits) of the City of Ahmedabad and Madalpar or Chhadavad and Vadaj in Taluka and Sub-district North Dascroi, District Ahmedabad. The particulars thereof are as under."

(2.) The document then proceeds to set out four properties : No.1. Mortgaged to Jayantilal Motilal Co, for Rs. 30,000. No.2. Mortgaged to Jayantilal Motilal Co. for Rs.25,000. No. 3. Mortgaged to B. Magaubhai for Rs. 30,000. No. 4. Mortgaged to Sheth Jiwanlal Chunilal for Rs. 16,500. It then continues : " As to the property thus described ... I have by this writing given the same to you in mortgage with possession for the moneys of this deed and the interest thereon and have made over that same into your possession." After providing that the income after meeting expenses for repairs, etc., is to be applied to keeping down the interest and as to any balance to be credited to principal it sets out terms as to insurance and repairs : " You have advanced the moneys of this deed to me for the period of a year. I am to pay the said moneys and the interest immediately after the expiry of the said period whenever you make a demand for the same." Then, after again setting out the particulars of the existing mortgages over the four properties the deed concludes : "On the security of the aforesaid property Rs. 1,01,500 and the interest thereon are payable by me to the above mentioned persons. Therefore in order to enable you to pay off the said debt the amount of this deed (namely) Rs. 1,25,000 has been kept by me as Anamt (in deposit) with you. Therefore I am to get the said debt paid to them by you, to get the full satisfaction entered on the mortgage bonds relating to the said property and to obtain releases (reconveyances) according to law in respect of the said mortgage bonds and to hand over the same to you. Likewise I am to deliver to you the documents delivered by me to them as well as the documents that may be with me. And as to the surplus amount that may remain over, you are to hand over the same in cash to me. In this way Rs.1,25,000 are to be made up and taken in full. And as regards the mortgage encumbrances that there are at present on the said property, on the same being discharged with the moneys taken from you, the whole of the property mentioned in this deed will be deemed to be as in first mortgage for your amount, I have not in any manner given this property to any other person except as stated above, by a writing, nor is the same subject to any claim or share on the part of any one nor is the same subject to a charge for moneys due,"

(3.) The surety bond was dated on 24 October 1921, the parties being the mortgagees to the deed above described and the two sureties. The material part is as follows: "Desai Krishnalal Narsinhlal residing near Sevka's Wadi in Khadia, Ahmedabad, borrowed from you Rs. 1,25,000, in words rupees one-lac twenty-five thousand in full in cash of Bombay currency at interest at the rate of rupees nine per cent, per annum. In security of the said amount he has passed a deed of mortgage with possession of his property. That being so, should the said Desai Krishnalal Narsilal fail to pay the whole of the amount mentioned in the said deed with interest or should the same be not recovered from his property, then as to whatever amount may be found claimable by you with interest under the said deed we, our guardians, heirs and assignees jointly and severally are to pay the whole of the same. Should we fail to do so, you may recover the same from the person and property of ourselves and our guardians, heirs and assignees in such way as you like."